Consumer group pushing proposal to have Netflix contribute to USF broadband

Consumer group wants to tax Netflix to pay for rural broadband [Hillicon Valley]

The Universal Service Fund (USF) is an $8 billion fund to subsidize phone services in rural and high-cost build-out areas. Recently, the FCC has begun a process to transition the fund from phone service to broadband service.

Using the fund for broadband is good public policy, but migrating to broadband also raises interesting questions about who should be contributing to the fund.

The Consumer Federation of America (CFA) has stated that it believes Netflix should be forced to pay into the fund. In the CFA’s opinion, Netflix and other companies that eat up large amounts of bandwidth are just as responsible for funding broadband deployment as the providers themselves.

Mark Cooper, the director of research for CFA, compared Netflix to phone service tolls. Although they were not service providers, phone tolls paid into the USF because of the costs they imposed on phone service. Cooper believes Netflix imposes a similar toll and should be charged a similar tax.

Blair Levin, a former FCC official, stated that he wouldn’t be opposed to demanding contributions from companies like Netflix, but he stressed that before the contribution debate took place, the FCC needed to iron out the distribution process for USF funds. Levin worries that muddying the contributor debate with the distribution debate will end up in a “political stalemate” and the USF will remain the out-of-date fund it is today.

Rural phone companies are obviously in favor of contributions from high-bandwidth websites like Netflix. According to the chief executive of the National Telecommunications Cooperative Association, Netflix uses up roughly 10 percent of each provider’s bandwidth and they should be required to contribute for that high level of usage.

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